Car crack-down in Beijing

THE Chinese – currently the most prolific car buyers in the world with more than 17 million new vehicles purchased in 2010 – have begun tough measures to counter threatening traffic gridlock in the capital, Beijing.

Beijing, with its host of government instrumentalities, is China’s major car market.

There are nearly five million vehicles on the roads there, a figure that has risen 85 per cent in five years.

The Beijing City Council is limiting new passenger car registrations next year to 240,000, a massive reduction from the 2010 figure of around 800,000 (which included a lot of pull-forward sales intended to beat the new restrictions).

Only Beijing residents can register cars in the city.  And during peak hours, only Beijing-registered cars with the proper ID marking will be allowed on Beijing streets. As part of the new quota system, car buyers in Beijing will have to be successful in a council-conducted lottery before obtaining a vehicle plate.

Beijing’s population is about 22 million – roughly the same as all of Australia.

Car makers fear that other big Chinese cities, many suffering from poor urban planning, may follow the lead of Beijing in the fight to ease traffic log jams.

The Association of Chinese Car Dealers expects a 50 per cent drop in car sales in Beijing (to a total of about 400,000) in the coming year due to the new limits as well as higher interest rates.

Apart from the 240,000 buyers of new cars who can get new licence plates under the quota, at least another 160,000 vehicles are expected to go to motorists who sold their old cars and bought new ones.

Some foreign car manufacturers expect their sales and profits to dip in 2011, although others, including Daimler AG indicated this week that it still anticipates double-digit sales growth in China during the coming calendar year.

The ambitious German luxury car-maker plans to invest 3 billion Euros over the next four years to expand its production facilities in China. In five years from now, it aims to sell 300,000 Mercedes-Benz cars in China annually, of which 200,000 will be built in Beijing. This year it sold around 140,000 cars to the Chinese.
GM, Volkswagen, Toyota, and Nissan also expect sales in China to grow in 2011.
BMW isn’t expecting any sales hardship either, commenting that the quota is not the first limitation imposed on new-vehicle sales in China.
In 2009, the Chinese government introduced tax incentives for cars with an engine capacity of 1.6 litres or smaller. That same year China accelerated past the United States to become the world’s biggest vehicle market.

In the first 11 months of 2010, the Chinese vehicle market was up a remarkable 34 per cent.

The inevitable cost of this surge in motoring is moves to restrict car use. In the east of China, regional governments of Jiangsu und Zhejiang are considering following the lead of Japan in mandating off-street parking as a requirement for buying a car.


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